These 5 people were supposed to save retail. Here's how they did.

2021/10/18 Innoverview Read

Every industry loves the next big thing. 

That is especially true when it comes to leadership. Retail is no different — the field holds tremendous talent, yet is always on the hunt for the next charismatic personality who will lead the way into a new era. 

And sometimes that happens. Executives swoop in with fresh ideas and exciting ventures, and there are pushes forward that bring companies into new ways of operating, resulting in a cascading effect of change. 

But, as the following stories show, no one person can be the savior of retail.

Rightly or wrongly, leaders such as Jenna Lyons, Ron Johnson and Rachel Shechtman were held up as the bright stars they are — only, in many instances, to come crashing down as reality set in, that a singular person cannot completely resolve retail's friction points.

Instead, as we learn time and time again, retail grows and transforms with consistent hard work. It takes teamwork to pave a new path forward. The superstars and visionaries along the way are really just playing their part in a larger, ongoing story of an industry making continual progress.

Here are five people who were industry leaders, set up to do the impossible: change retail forever. 

1. Jenna Lyons 

Jenna Lyons' meteoric rise is closely associated with her time at J. Crew. Lyons began working there in 1990 as an assistant designer in menswear after graduating from Parsons School of Design. She worked her way up, and ultimately was appointed by Mickey Drexler as executive creative director by 2008. 

In her time in that position, Lyons heavily influenced fashion: She made daytime sequins popular, showed up to the Met Gala in a denim jacket, reintroduced chunky accessories to a new era, started showing J. Crew at New York Fashion Week, and was even dubbed the "Woman Who Dresses America" by The New York Times. Lyons had tremendous cultural impact, too. Her style and signature glasses were imitated, and she made her acting debut on "Girls" after Lena Dunham modeled a character after her.

She also introduced the J. Crew Collection in 2008, which famously sported an $800 skirt and a $1,900 sweater in the middle of an economic recession. 

Drexler appointed her president of J. Crew in 2010. But, by 2014, J. Crew went from a net income of $35.4 million to a loss of nearly $608 million in one year. In the years that followed, Lyons was criticized for misunderstanding the core J. Crew audience. In April of 2017, she left the company as part of a "mutual decision." 

Lyons no longer has such wide-ranging reach, but she's still working in the industry. She has regrouped, coming back with a faux eyelash company, LoveSeen. "The woman who taught America how to dress is narrowing her focus considerably — to the little strips of hair on our eyelids," Allure wrote about her new venture. 

She also became the central focus and executive producer of the HBOMax show "Stylish with Jenna Lyons," which was a combination documentary and competition reality show.

2. Dave Brandon

At the pizza chain Domino's, Dave Brandon helped bring the fast food maker into the digital age and improve its fundamentals. He went on to see the company through the largest initial public offering in its sector at the time. 

If you were to interview Brandon for a job running the last national toy store chain, you might ask: So how can your experience with pizza be applied to toys? 

When Toys R Us hired Brandon as its new CEO in 2015, the retailer's board provided an answer to that question. "Dave Brandon has an exceptional track record of driving growth, operational performance and profitability in global businesses, while elevating brands and seizing opportunities in highly competitive markets," the board said in a statement. 

At that time, Brandon still had an aura of a turnaround artist from his days at Domino's. And the company needed one. Hobbled by debt from a private equity buyout, the toy chain had struggled with slouching sales and losses. His Domino's experience also gave him a relationship with Bain Capital, one of Toys R Us' owners. 

The idea was Brandon could right the ship and sail it through to an IPO, so that the retailer's investors might make their exit and the store chain could head off into the digital future. 

Things didn't happen that way. Toys R Us continued its struggles, while rivals Walmart, Target and Amazon all became greater threats in the toy space. In 2017, Toys R Us filed for Chapter 11 with hopes of a reorganization that would shave off some debt and leave it leaner but stronger. 

"We are continuing to provide customers outstanding service whenever, wherever and however they want to shop with us — just as we have for the past 70 years and will continue to do for decades into the future," Brandon reassured stakeholders at the time. 

But the company would collapse mere months later under Brandon's leadership. First came an abysmal holiday, with sales declines in part due to operational mishaps that followed years of underinvestment. Then — unbeknownst to suppliers, employees and most of the world outside of a few conference rooms — Toys R Us breached covenants on its bankruptcy loan. Ultimately, lenders pulled the plug and sent the company into liquidation. 

To be sure, some of Toys R Us' challenges were beyond the executive's control. Customers were rapidly shifting to digital buying methods and prizing more the convenience of generalists over the depth of the box toy store. Still, all of Brandon's plans for the retailer ultimately failed, including a bet on more combination Toys R Us and Babies R Us stores, an extension of an initiative by one of his predecessors. Meanwhile, the retailer also bungled critical functions like inventory management, including during the most crucial holiday season of the company's life. 

There was one thing Brandon and his executive team succeeded at before the retailer came undone: getting themselves paid. Brandon and other top managers took home millions of dollars in bonuses just days before the company filed for Chapter 11. The bonuses are a focal point in a lawsuit by former Toys R Us vendors and other unsecured creditors.

3. Ron Johnson

When former Apple retail chief Ron Johnson was tapped as J.C. Penney's chief executive in 2011, expectations were high. The tenure of longtime Penney CEO Myron Ullman ended in order to make way for the retail guru, who pioneered the Apple store concept — brightly lit locations anchored by helpful tech support, dubbed the "Genius Bar," and filled with thoughtfully displayed products and helpful sales staff.

The idea was to revive the stagnant Penney chain, which was suffering from the decline of the department store model and an over-dependence on apparel sales. If Penney wanted a jolt, it got it from Johnson; he set to work changing the product assortment and the discount-upon-discount pricing across the fleet.

But his moves were almost immediately deemed too extreme, too fast and inadequately tested. Customers were appalled, the board got nervous, and he was out within two years. At the National Retail Federation's annual meeting in 2020, Johnson acknowledged that he misjudged the culture at the century-old retailer.

Not that getting rid of Johnson was the answer to Penney's woes, any more than bringing him in was. The retailer has been in the midst of a seemingly endless turnaround, with four CEOs coming and going within a decade. Penney was bought by two of its landlords out of bankruptcy last year. As for Johnson — after leaving J.C. Penney, he founded Enjoy, a retail platform that delivers devices and tech support to customers' homes. In April, Enjoy announced that it's going public via a SPAC — or special purpose acquisition company — some time this year.

4. Rachel Shechtman

Macy's — which has been increasingly challenged by e-commerce, off-price retailers like T.J. Maxx, discounters like Target and DTC operations from brands — has made a series of moves to protect its market share in recent years. That includes expanding its own online sales, and experimenting with retail concepts to bring new life to its traditional department store approach.

Key to that was the recruitment of Story founder Rachel Shechtman, whose pop-up-style, themed boutique in Manhattan attracted a wide variety of partner brands and retailers. Macy's bought Story in 2018 and immediately began implementing its curation methods in stores, an effort led by Shechtman herself, who was given the title "brand experience officer."

Within a year or so, Story appeared at 35 Macy's stores, including its Herald Square flagship. Retail Dive reported on the experience of shopping those spaces, which were appealingly merchandised. Helpful, enthusiastic associates provided customer service worthy of a lovely boutique — or, even, a marvelous department store. Ultimately, though, Story remained a shop-in-shop with revolving merchandising that never lived up to the original in New York's Chelsea neighborhood.

Macy's also began testing a new store format led by Shechtman called Market by Macy's, designed to be located at off-mall strip-centers, including a pilot in Texas. The pandemic seems to have interrupted any momentum, however. Last year's financial and operational crisis delayed Macy's turnaround by a year. That's now back on track, but without Shechtman; as of June last year, she was out.

Retail consultant Doug Stephens, who had counseled Macy's to buy Story in the first place, laments its trajectory there. "In their deployment of STORY and Rachel Shechtman, Macy's squandered a golden opportunity to reinvent — not just the Macy's experience but the entire revenue model of department stores generally," he said by email last year. "But instead of taking a whole Macy's store and moving it over to the STORY business model ... they chose instead to treat it as a bauble, a fanciful little concept inside the same horribly boring Macy's store. In doing so, they killed their most important chance at survival."

5. Adam Neumann

Adam Neumann's first priority as head of WeWork wasn't retail. But, he certainly had some ideas about it. 

As early as 2017 the office-sharing startup teased the idea of expanding into retail, which would provide short-term leases for retail firms and incorporate stores into its coworking spaces. 

That concept seemed inspired. WeWork members were a captive audience for products and services. By 2018, 43% of employed Americans identified as remote workers, with flexible coworking spaces forecast to make up 30% of office spaces by 2030. According to commercial real estate firm JLL at the time, the highest concentration of coworking spaces was in malls, further illustrating the potential connection between remote work and commerce. 

WeMRKT launched that same year, with apparel, office supplies, fresh flowers and food options. Many of the products were sourced from WeWork's members. In only three months from launch, the company had plans to expand WeMRKT to 500 locations. The company spoke about providing community in the midst of a marketplace, an idea that also acted as an imperative for keeping everyone within the WeWork ecosystem, as there would be no need to venture outside its facilities to satisfy shopping needs.

Neumann was the charismatic personality with a lot of ideas about how to expand that WeWork ecosystem, and the leader behind other lofty WeWork revenue streams including WeWork apartments dubbed WeLive, an early-education school called WeGrow, a partnership with the Flatiron School and even a stake in a wave pool company

WeWork signaled its relationship with retail in other ways, most notably by buying the iconic Lord & Taylor flagship property on Fifth Avenue for $850 million to use as its New York headquarters. (As recently as this past August, that connection was still on display when HBC decided to partner with WeWork to launch SaksWorks coworking spaces.)

By 2019, though, everything was starting to unravel. Now renamed We Co., the company faced criticism after it filed a prospectus for an IPO, most notably detailing losses of over $1.6 billion in one year. The prospectus also revealed potential conflicts of interest for Neumann and problems with the company's business model. Neumann was eventually ousted as CEO of the company. As recently as last week, Neumann hired a defamation lawyer to fight accusations that he engaged in criminal activity while at WeWork.

(Source: Retail Dive These 5 people were supposed to save retail. Here's how they did. | Retail Dive)